Correlation Between Voya Vacs and First Trust
Can any of the company-specific risk be diversified away by investing in both Voya Vacs and First Trust at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Voya Vacs and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voya Vacs Index and First Trust Specialty, you can compare the effects of market volatilities on Voya Vacs and First Trust and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Voya Vacs with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voya Vacs and First Trust.
Diversification Opportunities for Voya Vacs and First Trust
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Voya and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Voya Vacs Index and First Trust Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Specialty and Voya Vacs is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Voya Vacs Index are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Specialty has no effect on the direction of Voya Vacs i.e., Voya Vacs and First Trust go up and down completely randomly.
Pair Corralation between Voya Vacs and First Trust
Assuming the 90 days horizon Voya Vacs is expected to generate 1.4 times less return on investment than First Trust. In addition to that, Voya Vacs is 1.21 times more volatile than First Trust Specialty. It trades about 0.18 of its total potential returns per unit of risk. First Trust Specialty is currently generating about 0.31 per unit of volatility. If you would invest 403.00 in First Trust Specialty on August 29, 2024 and sell it today you would earn a total of 19.00 from holding First Trust Specialty or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Voya Vacs Index vs. First Trust Specialty
Performance |
| Timeline |
| Voya Vacs Index |
| First Trust Specialty |
Voya Vacs and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voya Vacs and First Trust
The main advantage of trading using opposite Voya Vacs and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voya Vacs position performs unexpectedly, First Trust can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Trust will offset losses from the drop in First Trust's long position.| Voya Vacs vs. First Trust Specialty | Voya Vacs vs. Transamerica Financial Life | Voya Vacs vs. Royce Global Financial | Voya Vacs vs. Gabelli Global Financial |
| First Trust vs. Gabelli Global Small | First Trust vs. MFS Investment Grade | First Trust vs. Eaton Vance National | First Trust vs. GAMCO Natural Resources |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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